2 growth stocks I’m buying instead of Bitcoin in 2022

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Digital currencies have great potential in an increasingly digital world. This part of the economy is booming, so it’s no surprise that the demand for these currencies continues to grow.

I bought Bitcoin last year, but one thing that bothers me is volatility. Growth stocks can be volatile as well, but at least when a good company’s stock price drops, I can look at the company’s revenue and profit potential to get a sense of where the market is going. long-term action. On the other hand, analyzing cryptocurrencies after a sharp drop in price can feel like trying to find the flashlight when the power goes out.

For 2022, I have identified two battered growth stocks that I am ready to buy. Here’s what I like about DocuSign (NASDAQ: DOCU) and The Trade Desk (NASDAQ: TTD).

Image source: Getty Images.

DocuSign

DocuSign is a popular service that helps businesses prepare, sign, and electronically manage contracts and other agreements. It has over 1 billion users who rely on its cloud document solutions, and it is growing rapidly. Revenue has risen 179% in the past three years to $ 1.9 billion, but the stock recently slumped after a disappointing earnings report.

Investors were frightened by the deceleration in revenue growth and billings. As CEO Dan Springer said in a statement, “After six quarters of accelerated growth, we have seen customers return to more normalized buying habits.”

But we need to remember what a “standardized purchasing model” looks like for DocuSign. Prior to the pandemic, in fiscal 2020, the company had a robust 39% revenue growth rate. That doesn’t mean future growth will match the FY2020 rate, but there was clearly a hitch during the pandemic as businesses rushed to operate digitally. DocuSign’s growth accelerated to 57% year-over-year in the fourth fiscal quarter of 2021. While it does not maintain this breakneck pace beyond the pandemic, the opportunity looms large. term for more organizations to switch to digital services offers many advantages to the stock price.

As Springer noted in the most recent earnings call, “Even though the pandemic is abating and people start to return to the office, they are not going back to paper.” Management estimates the long-term addressable market for its services at $ 50 billion, so it can grow for a long time. Additionally, its dollar retention rate was 121% last quarter, showing existing customers are spending on additional services.

In the short term, DocuSign will increase its spending on sales capacity, training and field empowerment to accelerate the expansion of its customer base. This shouldn’t be a problem given the time savings and increased efficiency businesses gain by using the DocuSign cloud. platform for handling pesky paperwork.

With the stock falling 45% in the past three months since the results were released, much of the stock’s high valuation has been left out. But the stock won’t stay on the decline forever with the growth opportunities in DocuSign’s future.

Image source: Getty Images.

The trade office

The Trade Desk is an advertising management platform that is experiencing explosive growth as media becomes increasingly digital. The stock has returned 539% over the past three years, but has underperformed last year, up 5.8% at the time of writing. An acceleration in the digital advertising market, particularly with the growing interest of advertisers in serving ads to streaming video viewers, could be a boon to The Trade Desk over the next several years, as the company has access to a large portfolio of premium connected products. Inventory of television commercials.

The platform was launched in 2011 after founder and CEO Jeff Green acknowledged the ineffectiveness of internet advertising. Green previously worked at Microsoft, where he oversaw the software giant’s AdECN online ad exchange business. The Trade Desk basically helps large ad companies and tech companies know what they’re buying and provides a data-driven platform that helps advertisers manage their campaigns.

With ad spending picking up last year, revenue growth accelerated to 55% year-over-year in the first three quarters of the year. The Trade Desk cited the strength of smart TV platforms. The company recently expanded its partnership with Comcast’s NBCUniversal, which will allow advertisers to access Peacock’s video-on-demand inventory on The Trade Desk platform.

The total advertising market is expected to grow from $ 750 billion to over $ 1,000 billion over the next three years, according to IDC.Green believes all advertising will someday be digital. His business has enormous growth potential, with just $ 1.1 billion in revenue over the past 12 months.

Understandably, The Trade Desk stock is expensive, trading at a price / earnings ratio of 93 based on adjusted earnings over the past four quarters. a growing business that generates a profit than a digital currency that produces nothing and is difficult to value with any degree of confidence.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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